Gold Pulls Back from Record High

Gold dropped to around $2,430 per ounce on Monday, reversing earlier gains and pulling back from last week’s record highs as investors took profits. On Friday, the US economy added a net 114,000 jobs in July, falling short of the market expectation of a 175,000 increase. Additionally, the unemployment rate unexpectedly rose to its highest level since 2021, and wage growth slowed more than anticipated. This followed weak manufacturing data, with the ISM Manufacturing PMI showing a larger-than-expected contraction in factory activity, raising fears of a potential US recession. As a result, expectations for a dovish shift by the Federal Reserve increased, with markets now pricing in over a 70% chance of a 50 basis point rate cut in September and about 155 basis points of total easing anticipated for this year and next. Meanwhile, ongoing tensions in the Middle East continue to support demand for safe-haven assets like gold.

Before the important data releases, gold remains in a sideways trend, with the first support level at 2,435. If this level is breached, the next supports to watch will be 2,413 and 2,390. On the upside, the initial resistance is at 2,475; if this level is surpassed, the next targets will be 2,500 and 2,550.